Debt Collection Buying Guide
Overview
Have you heard this line before when chasing for payment
of an overdue account: "It's just that the two directors
need to sign the cheque, and one of them is out of town
for three weeks".
As unfair as it may seem, some very large businesses do
not pay their bills until they have to, as it can be a cheap
way to get a loan from you. Typically late payment is not
because your customers are insolvent.
For many businesses outstanding invoices are their largest
asset. Overdue bills are a nuisance, expensive to collect
on your own and a distraction from what you and your staff
should be doing. A collection agency can efficiently help
recover overdue debt for you. Once a third party is involved
it is often the case that debtors pay faster.
The industry is very professional and large (over £3 billion
turnover representing some 17 million claims are collected
annually). Various groups of collection agencies exist:
Factoring is an alternative service, and depending on your
needs, more comprehensive than debt collection. Collection
agencies need to be licensed by the Office of Fair Trading
and are regulated under the Consumer Credit Act 1974 (and
subsequent regulations). There are also strict laws disallowing
harassment and other inappropriate means to collect overdue
debts.
